American, US Airways merger: Where's the hub, bub?

A merged American Airlines and US Airways will carry more passengers around the world than any other, but even the biggest airline flying doesn't need eight hub airports on the ground.

By JASON KEYSER

capecodtimes.com

By JASON KEYSER

Posted Feb. 15, 2013 at 2:00 AM

By JASON KEYSER
Posted Feb. 15, 2013 at 2:00 AM

» Social News

CHICAGO — A merged American Airlines and US Airways will carry more passengers around the world than any other, but even the biggest airline flying doesn't need eight hub airports on the ground.

That means amid the hoopla of Thursday's merger announcement, there are a few mayors, a handful of chambers of commerce leaders and lots of frequent flyers worried about what's to come. Expect their sales pitches to start soon about why their city should remain a hub.

"Nobody has that many hubs," said Robert Poole, an aviation expert and director of transportation policy at the Reason Foundation. "Eight hubs for the merged American would just not be sustainable — too complex and not really meeting enough of the travel needs."

Hubs aren't just civic icons — think Chicago's O'Hare or New York's John F. Kennedy Airport — they are also major economic engines. The frequent flights to hundreds of destinations are an attractive enticement for executives deciding where to locate a business.

But while local governments can build airports to support hubs — helping airlines come up with the billions of dollars needed for new terminals, parking garages and runways — it's up to the airlines to set up homes inside. When an airline decides to leave town, the loss of hub status can erase the value of that investment, leaving behind empty terminals.

US Airways CEO Doug Parker says the combined airline will keep all eight hubs, but the results of past mergers suggest that's unlikely in the long run.

Whole terminals at Pittsburgh International Airport have been abandoned since US Airways began winding down its hub there in 2001. Thousands of jobs have vanished, and an airport that once served more than 20 million passengers a year had just 8 million last year.

Also in 2001, American Airlines parent AMR Corp. bought Trans World Airlines out of bankruptcy. It didn't take long for American to shut down TWA's hub in St. Louis, where officials had moved major roads and bulldozed hundreds of homes to build a $1.1 billion runway that's no longer needed.

"These are risks for cities, particularly when they do airport expansions based on having a large transfer hub," Poole said. "You get an airport configured for something that's way more than the size of your community justifies in terms of origin and destination traffic, and then if the hub goes away — Whoops! You are really stuck."

In the shakeout of American's merger with US Airways, experts believe American's hubs in Chicago, Dallas-Fort Worth, New York, Los Angeles and Miami are likely to emerge as winners, if only because those markets can support a large amount of traffic on their own. That leaves US Airways' facilities in Philadelphia, Phoenix and, most especially, Charlotte, N.C., most at risk.

Roughly 60 percent of the 40 million travelers who pass through Charlotte-Douglas International Airport transfer to another flight, including direct flights to more than 30 destinations in Europe, Latin America and the Caribbean.

Airport officials said the city has prospered from hub status, with 8,000 new companies investing more than $5 billion in the area to create more than 78,000 jobs since the current terminal opened in 1982. Among them is Chiquita Brands International, which announced in 2011 it was abandoning Cincinnati in large part because of greater access to foreign flights from Charlotte. Cincinnati's airport had been hit hard by Delta's decision to shift flights to other hubs after merging with Northwest Airlines in 2007.

Charlotte-Douglass also benefits from its location outside of the Northeast Corridor, where congestion in New York and Philadelphia's overlapping airspace is a frequent problem.

But all of that may not be enough to ensure Charlotte's future, said Adie Tomer, an associate fellow at the Brookings Institution. With 1.8 million people, the city just isn't big enough.